Over 90% of banking fraud comes from employees – BoG reveals

Dr Joe France, the Director of Financial Stability, Bank of Ghana (BoG), has said that over 90 per cent of fraud-related cases in the banking sector are associated with the employees.

According to him, investigations have revealed that some of the banking staff masterminded most of these frauds and urged management of Banks to be wary of people they recruit and do proper checks before employing them.
Dr France said this in Accra at the launch of ‘EMP-Verify’, a GAVAC Business Solutions that detects the backgrounds of individuals to mitigate risks in organizations as well as the banking sector.

More than GH¢30m lost to financial crime in 2017

The amount of money the banking sector in Ghana lost to various types of fraud in the year 2017 amounted to GH¢30.08 million the BoG has revealed.

Reported incidents of fraud increased by 41.66 per cent from 1001 cases in 2016 to 1,418 in 2017.

In the same year, the total value reported for fraud or attempted fraud amounted to approximately GH¢190.38 million, of which 16 per cent, or GH¢30.08 million, was reported as losses while 84 per cent – i.e. GH¢160.30 million –was recovered.

Non-banking financial institutions reported 725 incidents, which is 51.2 per cent, whereas rural and community banks recorded the 223 incidents accounting for 15.72 per cent of all reported incidents. Commercial banks reported 470 incidents representing 33.15 per cent.

The gross monetary value of fraud incidents reported to the central bank by commercial banks is approximately GH¢110 million, while that of rural and community banks was over GH¢677,000 while over GH¢550,000 was reported by the non-banking financial institutions.

Cash and deposit suppression recorded the highest incidents in fraud and attempted fraud reported, with 697 incidents reported to the Bank of Ghana in that year. Ninety per cent of the fraud incidents reported by non-banking financial institutions hinged on cash and deposit suppression. The gross value loss of suppression incidents is over GH¢15 million with about GH¢11 million lost in net value.

Overall, cyber fraud recorded the largest volume of GH¢110,865,960. But not much was actually stolen through cyber fraud, with less than one per cent – i.e. GH¢232,818.516 lost in net value1.

GH¢244.32m fraud hits banks, others in 2016

The total monetary value involved in all reported fraud cases by financial institutions, both successful and attempted, for the year 2016 amounted to approximately GH¢244.32 million.

The amount constitutes 1,001 fraud incidents in 2016 reported to the Bank of Ghana (BoG).

Main fraud cases
The main fraud cases reported were suppression of customer accounts by staff of financial institutions, card fraud, forgery and alteration of documents, manipulation of accounts, and negotiable instruments.

Others included fraudulent collection of international remittances by persons not named as recipients, transactions involving cloned and stolen cheque, and fraudulent transfers through hacked email accounts, the report added.
Types of complaints against banks

BoG explained that the complaints received from the public covered aspects of banking service delivery such as unauthorised withdrawals from customer accounts, especially through internet banking, payment of international remittances to persons other than the intended beneficiaries, and ATM-related disputes.

1,529 Complaints from general public
The report also revealed that a total of 1,529 complaints were received from the general public with respect to banking business.

1,362 Cases against Non-Bank Financial Institutions
Out of this total, the report said 1,362 cases were complaints made by customers of Non-Bank Financial Institutions, especially microfinance institutions.

Dr France the financial sector thrives on trust and confidence, and that, it was imperative for financial institutions to do due diligence in recruiting staff for optimum performance.

He explained that one case of fraud could dent the reputation of the bank, urging players in the sector to exhibit high sense of integrity in the discharge of their responsibilities.

He said on their part, the Bank of Ghana had put in place strong mechanisms to check the backgrounds of staff before engaging their services.

That, he explained, was necessary because the first sector handles funds of clients and it was prudent for the public to have confidence in fund managers and ensure that the funds are protected from any threats.

“You can have the best employees who are doing well, but if their integrity and trust is questionable, then it poses serious problems”, he added.

He called for collaboration to flush out these risks through robust systems.

MrsMaameYaaTiwaaAddo-Danquah, the Director General, Criminal Investigation Department, said her outfit had digitised all convicted crimes from 1957 to date for easy references.
She said one of the challenges facing the department is the ability to put a credible evidence at the court since there were weak documentations.

“Truth is not evidence. You may be saying the truth, but if it is not backed with evidence, it becomes difficult for prosecution”, she added.

She commended GAVAC Solutions for bringing on board a system to check background of potential staff before recruitment and urged organizations to take advantage of the system to protect and secure assets.
Mr Harry Baiden, the Founder of GAVAC Business Solutions said statistics revealed that 88 per cent of curricula vitae are falsified.

He said comprehensive checks not only look at criminal and educational records but the candidates’ conduct, social network and reputation, employment history and place of residence.
He explained that the EMP-Verify system help Human Resource partners and recruiters to make informed decisions, avoid negligent hiring, the negative impact and cost associated with it.